Ease of use and open access, transparency, lower costs, and frankly better performance by ETF's compared to hedge funds is causing a massive shift in the way small and more importantly large institutions invest. Early in May, the amount of funds in global ETF's, which have only been around for just the past 22 years, topped $3 trillion. May also has marked the first time ETF's total asset value topped that of the 66 year old investment vehicle known as hedge funds, which currently sit around $2.9 trillion globally.
While mutual funds still dominate the investment world with more than $15 trillion in assets under US managed funds, ETF's certainly appear to be heading as the clear #2 in terms of total dollars invested. The industry has seen massive growth over the past few years, specifically in the US; 2013 US ETF assets rose by $188 billion, 2014 that figure jumped to $243 billion, and at the start of May year-to-date US inflow were already at $72 billion, which is a must faster start than experienced in 2014 when only $35 billion had been pumped into ETF's from the start of January to the beginning of May.
While the massive growth in ETF's over just the past five years is astonishing, due to the four qualities they offer which hedge funds don't, it shouldn’t be of a surprise that their popularity has and will continue to grow. So let's take a look at the four qualities. Continue reading "Move Over Hedge Funds, ETF's Are Taking Over"→
The name Bill Ackman carries more weight now than it did a year ago.
2014 was a rough year for most hedge fund managers. The average fund returned just 2% and the first six months of the year saw 461 hedge funds close shop.
Yet Ackman's fund, Pershing Square Holdings, returned an astounding 40.4% in 2014 and went from managing around $11.5 billion assets at the start of the year to more than $18 billion currently.
Ackman was named top dog in Bloomberg's 2014 ranking of the world's best hedge fund managers.
And that success helped make Pershing Square Holdings' (AMS: PSH) recent IPO that much more successful. The firm's October IPO -- which opened on the Euronext Amsterdam exchange -- was one of Europe's largest in 2014, at $2.7 billion.
Investors who bought shares of the company at the time of its IPO have already seen a nice 12.7% gain in just a few months.
As I was perusing my morning news feed, I came across an appalling amount of headlines about the ever-dreaded 'correction.' While there is value in some of these articles, the majority provide no unique insight.
Here's how one should think about a possible correction: How do I spot a correction? How do I protect against losing my shirt in a downturn? And how do I properly implement any suggested strategy?
Today I've asked the editor from marketfolly.com and give us their expert opinions on how the best and the brightest of the hedge fund managers. Or are they the best and brightest? Are they lucky, or good sales people? Let me know in the comments and take a trip over to marketfolly.com, as they track 35+ prominent hedge funds through 13F filings where they are required to disclose their long equity, options, and note positions to the SEC. (They aren't required to disclose their shorts or positions in other markets).
Firstly, we'll look at David Einhorn's Greenlight Capital. If you're unfamiliar with him, you can read up on him here. In a recent investor letter, Einhorn mentioned that he was long Gold due to threats of inflation and risks in paper currencies. He mentioned that the US Dollar was being debased as the Federal Reserve is forced to expand its balance sheet and thus he expects Gold to rise as the dollar declines. So, let's take a quick look at the technicals through GLD (the Gold Trust ETF).
Let's look at GLD over a yearly timeframe just to get the big picture. It had seen a period of lower highs and lower lows and then broke out of that trendline (illustrated in green below) here in the new year as investors sought refuge from the brutal markets. And, some might argue that a re-test of that trendline is in order.
Turning to a 6 month timeframe, we see that GLD has seen some selling pressure. However, it still maintains its trend line over the 6 month timeframe (illustrated below in green). Additionally, the past resistance at $87 has now become support (illustrated with the horizontal purple line) and we would look for GLD to successfully test this support line. Conveniently, the 50 day moving average (blue line) also acts as support and is hovering around the $87 level. So, the past resistance, the 50 day moving average, and the trend line have all converged to provide near-term support for GLD. Should GLD fall beneath these important levels of near-term support, it could really start to move lower as the volume has begun to creep up. A test of this support is almost imminent and will dictate which way the ETF will swing so make sure you watch it carefully to determine if the trendline holds. So, should you agree with Einhorn's stance, now you can better gauge the price action to determine a proper entry or exit point.